Lansley clings on to NHS “Any Qualified Provider” policy - but it’s in a mess

The Government's response to the Future Forum's recommendations on NHS reform is disappointing but not unexpected. On the positive side, the deadlines for many of the changes have been extended and this will limit the damage, but the forum's recommendations essentially agree with the government's policy and hence the re-organisation will continue. In fact, the only pause was in the passage of the Health and Social Care Bill – the re-organisation of primary care trusts continued regardless.

One of the most contentious issues of the Bill is the threats to NHS providers in the name of "choice and competition". The government plans to make only minor changes here. It says that commissioners will have a "duty to promote choice" and this will be reinforced through a "choice mandate". This is a bizarre statement. Surely commissioners should have a duty to provide the best care? A duty to promote choice allows patients to use bad providers as well as good providers, yet as long as a patient is allowed to choose, that duty is fulfilled.

The regulator, Monitor, will no longer "promote" competition as an end in itself. This has been heralded as a victory against competition, but is it? The government says that it "will maintain the existing competition rules for the NHS" and give it a "clearer statutory underpinning" which implies that there will be at least the same, or more competition, and not less. The government will do this by making the Department of Health's Co-operation [sic] and Competition Panel a statutory body within Monitor "retaining its distinct identity". If the government wanted to reassure the electorate about introducing more competition in the NHS then it would have abolished this organisation rather than enhanced it.

The talk about restricting Monitor's promotion of competition is merely smoke and mirrors. The government has decided that its plan to force all hospitals to become Foundation Trusts by April 2014 was too ambitious and so it now says that Monitor will continue to regulate FTs until April 2016. Since this means that Monitor will authorise NHS trusts to be Foundation Trusts they will have a conflict of interest if they are also to promote competition against the trusts they are authorising. Recognising this, the government merely says that Monitor’s FT authorising arm will no longer promote competition, but the CCP (a “separate” part of Monitor) will continue to promote competition. There is no change in the policy to introduce more competition.

The government says that it will still implement the policy of "Any Qualified Provider" (AQP), but will phase in this policy from April 2012 starting with community services. The government's policy in this area is somewhat muddled. The AQP policy is coupled with another policy called "Right to Provide" (R2P). This says that groups of workers can create their own companies – mutuals or social enterprises – and will have a right to request and subsequently provide an NHS service. The aim is to create a fragmented system of thousands of companies which will be deprived of NHS benefits like training and pension rights, or schemes like Agenda 4 Change. Each of these companies will be an "Any Qualified Provider" and they will be expected in the future to compete for business.

However, since Foundation Trusts (137 out of 253 trusts) are independent, they are excluded from R2P, and the 116 trusts yet to attain FT status will be reluctant to allow surplus-generating services to be hived off this way because it would threaten their ability to meet the FT financial criteria. Further, in the response to the Future Forum report the government says that it will "remove Monitor’s powers to open up competition by requiring a provider to allow access to its facilities to another provider". This is significant because the government's intention was that, for example, a group of orthopaedic surgeons in a hospital could group together as a profit-share mutual and continue to perform the same work, using the hospitals facilities under AQP. They have now ruled this out.

The AQP policy says "commissioners cannot refuse to accept qualified providers once qualified" which heralds some kind of free-for-all market and raises the question of whether we will need commissioners at all? The policy also says that "there will be no volume or payment guarantees for providers" and the government's response to Future Forum says AQP will be "limited to services covered by national or local tariff pricing", that is, fixed price. Currently, NHS hospitals can work collaboratively with PCTs to reduce costs by agreeing volume contracts (the hospital benefits because it can plan staff and facilities around a fixed payment, and PCTs benefit because they get reduced costs). The AQP policy implies that there will be no scope to reduce costs, and worse, AQP companies that cannot be refused work by commissioners will get fat on fixed prices.

The government seems intent on introducing competition into the NHS through Any Qualified Provider. However, the policy is in disarray, and if it is implemented it will result in a fragmented system that may even cost more than the current system. This is all occurring at a time when funding is being cut, which will inevitably result in further healthcare rationing.